Access to Financing and Firm Growth: Evidence from Ethiopia

Dereje Regasa, David Fielding and Helen Roberts ()
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Helen Roberts: Department of Economics, University of Otago, New Zealand

No 1707, Working Papers from University of Otago, Department of Economics

Abstract: Using Ethiopian firm-level data, we model the effect of different types of financing on firm growth. The form of financing is potentially endogenous to firm growth, and one contribution of this paper is to introduce a new instrumental variable which captures local variation in financial depth. Unlike previous studies of firms in low-income countries, we find evidence for a negative relationship between the use of external finance and firm growth, which suggests that there are substantial cross-country differences in the finance-growth nexus. We discuss possible explanations for this phenomenon and its implications for development policy.

Keywords: Ethiopia; firm growth; external financing (search for similar items in EconPapers)
JEL-codes: D24 G31 O55 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2017-04, Revised 2017-04
New Economics Papers: this item is included in nep-cfn, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.otago.ac.nz/economics/otago642358.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1707

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